Bitcoin’s price is stagnating under a wave of positive macroeconomic news, but this is a party that cannot continue indefinitely and when the global economy does come crashing down, some believe that the price of Bitcoin could soar as high as $50k.
This being said, it now becomes a matter of when this potential economic downturn will actually occur, as recent developments surrounding the US-China trade deal have shifted investor’s sentiment and may help fuel further short-term gains within the equities markets.
The Stock Market Is Flying High, But For How Much Longer?
Bitcoin’s price has so far failed to recapture July’s dizzying rally, which saw it spike to just shy of $14k, whereas the stock market’s decade long bull run continues to exceed expectations as investor confidence is bolstered by reports of an early trade deal formed between the US and China.
Experts also believe that the Fed’s decision to inject billions into the financial system following the recent repo market liquidity crisis is directly responsible for the latest stock market pump.
On the surface level, things are looking good, but Lisa Shalett, Chief Investment Officer at Morgan Stanley Wealth Management, believes that the repo money is being siphoned into financial assets rather than the real economy, which could be problematic.
“This really speaks to the idea that once again we’re on the brink of potentially being in this bubble. Where valuations are about the story and the narrative and not about the cash flow and profits. You would think we would have learned this lesson before. But here we go again.”
Also, some experts remain skeptical about reports of a trade deal between the US and China being reached. Jeffrey Gundlach, Chief Executive of DoubleLine, drew attention to China’s refusal to address intellectual property, as well as their focus on the long play, which means they are happy to drag things out until after the US elections, as two potential road blocks for a deal being closed.
As such, a more in-depth analysis of the situation shows that recent efforts between the two countries are nothing more than window dressing, adding to the threat of an imminent stock market crash and a global recession.
That being said, the question remains: where will investors move their money in the case of economic turbulence?
Bitcoin Is Superior To Gold
Clem Chambers, CEO of ADVFN, spoke in a recent interview about how mainstream news reports claim all is well within the global economy, which could be suppressing interest in Bitcoin.
“When people start thinking that it’s going to be all over soon, or there’s going to be a three part deal, and part one coming up. You’re not going to be so eager to put your Yuan into Bitcoin… And the same uncertainty equals gold,” he explained.
On that note, despite the widespread reports of a trade deal being reached, uncertainty still reigns. That being said, Chambers spoke about the alternatives in Bitcoin versus gold:
“If you’ve got to move fast, uncertainty means Bitcoin. I mean, gold, you can’t really carry much of it, it’s hard to store, it’s quite difficult to buy. You can’t just go, I’ll have some of that gold. It’s much easier to buy Bitcoin, and move Bitcoin, and protect Bitcoin than gold. So gold is at a bit of a disadvantage. And it’s old usage as the flight capital of choice is being eroded.”
As a prominent Bitcoin bull, Chambers offered a bullish price prediction for the cryptocurrency, even entertaining the possibility that BTC will one day surge as high as $1 million.
“I think Bitcoin could easily go to twenty thousand. I’m expecting it to go to fifty, I’ll be very happy if it were to go to one hundred thousand. And the one million dollar Bitcon number is purely what you get if every Satoshi is worth a dollar, no, sorry, a cent. Let me get that right. So that’s just a mathematical number,” he bullishly noted.
Having said that, Chambers was quick to point out that lofty valuations like these will take many years to come to fruition. This is partly because of what Bitcoin seeks to achieve and the forces that want to stop that from happening.
All eyes are on the macroeconomic picture as the world awaits what happens next.
Featured image from Shutterstock.
Samuel Wan , 2019-11-18 16:00:25